Chance of July interest rate hike intensifies
Published 28/06/2011 | 14:45
The head of the European Central Bank has reiterated plans to raise interest rates in July after German inflation held above the bank’s target of close to 2pc.
Speaking in Amsterdam, after new figures showed that German inflation came in at 2.3pc in June, unchanged from May, outgoing ECB chief Jean Claude Trichet, said the bank is in “strong vigilance mode” – a phrase he often uses to signal a rate hike.
An increase of more than 0.25pc is unlikely and will hit Irish consumers with variable and tracker mortgages.
Such a hike would add €12 per month to €100,000 mortgage.
Trichet also used the "strong vigilance" codewords at the ECB's meeting earlier this month and the same term was used by executive board member Juergen Starke earlier this month.
The German data also gave a steer on the direction of inflation in the broader 17-nation euro zone, which was running at 2.7pc in May and is expected to have edged slightly higher.